- USDT led the market at the time of writing, with an impressive 70% share
- At the same time, Bitcoin tested the crucial support level at $60,000.
Tether [USDT] at the time of writing, it commanded the stablecoin market with a 70% market share, while USDC held the second spot with 20.8%.
With a total market capitalization of $168 billion, stablecoins make up 8.2% of the entire cryptocurrency market.
Just as USDT reigns supreme among stablecoins, so does Bitcoin [BTC] continues to dominate the broader crypto landscape.
Given their substantial role, any major moves from both could create ripples across the crypto world, making their activities a major area of interest for AMBCrypto.
USDT’s dominance could dampen Bitcoin’s rise
Bitcoin last tested the $60,000 support level on August 8, but the bulls were unable to hold the price. Since then, it has been consolidating for ten straight days.
However, a crucial bullish push has taken Bitcoin out of consolidation, with the current price at $60,941.
Meanwhile, AMBCrypto’s analysis of a after from the data analysis platform Alphractal on X (formerly Twitter) has uncovered a connection between Bitcoin and stablecoins.
Source: Alphractal /X
Historically, whenever a major resistance level has been tested, Bitcoin has coincided with an increase in stablecoin dominance.
Simply put, this signals that investors could be turning cautious. By converting their holdings into stablecoins, they protect themselves against Bitcoin’s volatility.
In a separate analysis, AMBCrypto examined whether high USDT dominance could potentially put Bitcoin in a downtrend. The following insights emerged from the research.
Source: Glassnode
On the one-month chart, the total net flow of USDT fell into the negative zone, indicating that more USDT was withdrawn from the exchanges than was deposited.
On August 9, approximately USD 41 million flowed out of the exchanges, a notable increase from the previous day’s USD 35 million.
If this trend continues, it could dampen Bitcoin’s price rise, potentially preventing a breach of the $62,000 resistance level.
Source: TradingView
The Altcoin season may not last if USDT dominates
In the same post, Alphractal concluded that the combined dominance of Bitcoin and all stablecoins was 65.2%, indicating low interest in altcoins.
It is not surprising that Ethereum [ETH] price rose above $2,600. After the rise of Bitcoin, it reached $2,651 at the time of writing. Despite this, the altcoin seasonal index remained bearish.
Read Bitcoin’s [BTC] Price forecast 2024-205
Data from CoinMarketCap revealed a striking trend: while Ethereum’s market cap fell by 23.77% and Bitcoin by around 9% over the past month, the stablecoin market cap actually grew by 3.04%.
Source: CoinMarketCap
This shift highlighted increasing confidence in stablecoins, which if left unchecked could dampen the momentum of major cryptocurrencies.